Thailand has imposed a state of emergency in its capital, Bangkok, and surrounding areas.
The action by Prime Minister Abhisit Vejjajiva comes a day after anti-government protesters swarmed into a hotel hosting an Asian summit, forcing its cancellation.
The protesters, who are seeking Abhisit's resignation, also blocked a major Bangkok motorway for several days last week, disrupting traffic.
The decree bans gatherings of more than five people and forbids reporting that is considered threatening to public order.
Bands of red-shirted anti-government protesters roamed areas of Bangkok as the emergency decree was announced, with some smashing a car they believed was carrying Vejjajiva, and others attacking motorists who hurled insults at them.
The emergency decree also allows the government to call up military troops to quell unrest.
"The government decided to impose the state of emergency because we want to return the country to normalcy," Abhisit said on national television.
"The government will try every way to prevent further damage. I ask the people to support the government in order to restore order in the country."
Earlier, a protest leader who spearheaded Saturday's demonstrations, Arisman Pongruengrong, was taken into custody and flown by helicopter to a military camp for questioning, said police spokesman Maj Gen Suport Pansua.
Abhisit also vowed swift legal action against other protesters who stormed the venue of an East Asian Summit in the beach resort of Pattaya on Saturday, forcing the summit's cancellation. Thai authorities had to evacuate the Asian leaders by helicopter.
Abhisit spoke on television as fears mounted that the country could face violence or a military crackdown in coming days.
"The next three to four days will be crucial for the government to prove itself in restoring peace and order in the country," Abhisit said.
"The government will take action against those who were involved in the incident yesterday without bias."
Demonstrators from the United Front for Democracy Against Dictatorship say Abhisit's four-month-old government took power illegitimately and want new elections. They also accuse the country's elite - the military, judiciary and other unelected officials - of undermining democracy by interfering in politics.
Editorials in Bangkok newspapers today lashed out at both the protesters for destroying Thailand's international reputation and the government for a massive security breakdown.
At yesterday's summit, more than 1,000 demonstrators broke through a wall of unarmed soldiers, smashed through the convention centre's glass doors and ran through the building, blowing horns, waving Thai flags and shouting demands for Abhisit to resign.
They declared victory after Abhisit cancelled the summit, where leaders of regional powers China, Japan and India, and the UN secretary-general and president of the World Bank, planned to discuss the global financial crisis.
China's Premier Wen Jiabao had planned to announce generous aid packages at the summit, including a US$10bn (€7.5bn) fund for investment in infrastructure, the official Xinhua News Agency reported in Beijing.
It was not immediately clear if China would go ahead with the planned investment.
"We have won. We have stopped them from holding a summit," Jakrapob Penkair, a protest leader, said in Bangkok. "But we have not achieved our goal yet. We will continue to protest in Bangkok until Abhisit resigns."
Abhisit later denounced the protesters as the "enemies of Thailand".
Political tensions have simmered since former Prime Minister Thaksin Shinawatra was removed by a military coup in 2006.
Thaksin opponents marched last year to remove Thaksin's allies from power, even shutting down the country's main international airport for about a week in November.
After a court ordered the removal of the previous pro-Thaksin government for election fraud, Abhisit was appointed by Parliament in December - sparking Thaksin supporters to take to the streets.
Their numbers grew to 100,000 in Bangkok last week.
Later armoured vehicles were seen on the streets of Bangkok following the announcement of a state of emergency.
Army spokesman Col Sansern Kaewkamnerd said the military's presence is not a sign of an imminent coup but a measure to restore order.